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Chinese ad agency involved in product endorsement scam

Published on June 16, 1997.

BEIJING -- A committee set up by an advertising agency is being prosecuted for conducting false appraisals of products marketed by the agency's clients, China Daily reported on June 13. The Beijing Tieliu Advertising Co Ltd set up the committee, which claimed it was formed by several news media.

The unqualified committee last year signed contracts with industrial enterprises, promising to review their products. A number of products, some of which were later found to be substandard by state quality inspectors, were praised as "famous products" and given certificates by the committee, according to a report released by the State Economic and Trade Commission and the State Bureau of Technical Supervision.

In return for the favorable publicity, investigators allege that the committee charged each manufacturer $3,132 for "product appraisal and advertising." The committee was not officially registered or approved by any local civil affairs departments and administrations for industry and commerce in Beijing. The committee has been ordered to stop making appraisals immediately and the manufacturers are no long allowed to site the committee's endorsements. Those responsible for the planning and arrangement of the activities will be seriously punished, the report noted. News media units involved in the appraisals will be criticized or prosecuted, the report said. The Tieliu agency was ordered to return all fees collected by the illegal committee.